I have tested this trick successfully on Windows XP with service Pack-2 , Service Pack 3 and Windows 2003 server standered Edtion.
Log in with administrator rights and Open registry editor ( click on Start -Run and type regedit)
now navigate for follwing key :
Now in righ hand pane double click on Start
change it value to 4 to block USB storage and 3 to open Usb storage
Now close registry editor and reboot.